Scott's Liquid Gold, Inc. (now Horizon Kinetics Holding Corporation following a merger completed on August 1, 2024) reported significant financial changes in its latest 10-Q filing for the quarter ending September 30, 2024. The company’s total revenue for the three months ended September 30, 2024, was $15.4 million, an increase from $12.7 million in the same period of 2023. This growth was attributed to rising assets under management (AUM) and product sales from the recent acquisition of Scott’s Liquid Gold.

Despite the revenue increase, the company reported a net loss of $38.2 million for the quarter, compared to a net income of $25.5 million in the prior year. This loss was primarily due to a deferred income tax expense of $59.7 million resulting from the conversion from an LLC to a C-Corp, alongside increased operating expenses. Operating income decreased to $1.4 million from $1.6 million year-over-year, while total operating expenses rose to $14.0 million from $11.1 million, driven by higher compensation costs and general administrative expenses related to the merger.

Total assets surged to $365.1 million as of September 30, 2024, up from $231.9 million at the end of 2023, largely due to the merger and increased investments. Total liabilities also increased significantly to $99.7 million from $22.8 million, reflecting the financial implications of the merger and the associated deferred tax liabilities.

The company’s cash and cash equivalents improved to $18.1 million from $10.5 million at the end of 2023, indicating a stronger liquidity position. Investments at fair value also saw a substantial rise, reaching $74.9 million compared to $37.6 million previously. The company’s investments in proprietary funds increased to $177.9 million from $104.0 million, reflecting a strategic focus on alternative investments.

Management and advisory fees for the quarter increased by approximately 17% year-over-year, attributed to higher AUM in proprietary funds and separately managed accounts. However, management fees related to the INFL ETF decreased due to a drop in AUM.

The merger with Horizon Kinetics, which resulted in Horizon Kinetics becoming a wholly-owned subsidiary, was a pivotal strategic development. This merger was accounted for as a reverse acquisition, with Horizon Kinetics as the accounting acquirer, significantly altering the company’s financial landscape.

As of September 30, 2024, the company’s disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting, prompting the hiring of a new Chief Financial Officer and additional trained professionals to address these issues.